Organization Capital, Large Startups, and the Dearth of IPOs

Ruediger Fahlenbrach, Leandro Sanz and René M. Stulz

No 35191, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Many startups in the 2000s have remained private after achieving large valuations, a pattern that funding availability alone cannot explain. We propose that startups relying heavily on organization capital to achieve economies of scale and network effects through digital technologies are more likely to become large private firms than exit earlier via an IPO or acquisition. Using LinkedIn data, we construct a novel measure of organization capital intensity for startups. Exploiting a legal shock that strengthened organization capital protection, we provide causal evidence that organization-capital-intensive startups are more likely to remain private and grow large rather than exit early.

JEL-codes: G24 G32 G34 (search for similar items in EconPapers)
Date: 2026-05
Note: CF
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